California suffers third series of power blackouts

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California suffers third series of power blackouts

(Recasts, updates throughout with brief outage) By Nigel Hunt

LOS ANGELES, Jan 21 (Reuters) - California suffered its third series of blackouts in less than a week on Sunday, with some customers of municipal utilities in the northern half of the state losing power for about 20 minutes, according to a statement issued by California's electric grid manager.

The latest outage, affecting around 120,000 people, was far less widespread than blackouts on Wednesday and Thursday, both of which cut off about two million of the 34 million residents in the nation's richest and most populous state.

The California Independent System Operator (ISO), which manages around 75 percent of the state's power grid, said the outage was caused by transmission problems which originated at a substation around 90 miles east of Portland, Ore.

"The California ISO does not forecast further outages tonight, but is keeping a close eye on any transmission problems," the statement said.

All three series of blackouts have only covered northern California with customers in the south of the state yet to experience any service interruptions.

Earlier Sunday, the ISO had said it expected to squeak through the next couple of days without further rolling blackouts, with some of the state's aged fleet of power plants poised to return to service.

The state is suffering a chronic power shortage which has its roots both in insufficient supply and in a credit crisis caused by the near bankruptcy of its two leading utilities.

To meet demand, California utilities have been forced to pay skyrocketing prices for wholesale electricity on the spot market. But they are not permitted to pass through their full costs to consumers under the state's 1996 deregulation law.

The burden has taken San Francisco-based Pacific Gas & Electric, a unit of PG&E Corp., and Edison International unit Southern California Edison, which is based just outside Los Angeles, to the brink of bankruptcy.

Democratic Gov. Gray Davis, although still generally popular, has been targeted by critics who believe he has not acted decisively to tackle the state's chronic power shortage and the near bankruptcy of its two largest utilities.

"He is looking for a solution that will work, not a solution for the moment. He wants legislation that is going to fix this once and for all," Davis' spokesman Steve Maviglio told Reuters on Sunday.

The state's two main utilities have seen their debt ratings cut to junk status. Power sellers have been reluctant to do business with them, exacerbating the shortage of electricity.

Last week Davis signed legislation which allocated $400 million for the California Department of Water Resources to buy power on behalf of the utilities and their 24 million customers who account for 70 percent of the state's population.

In a poll published late last week, the Public Policy Institute of California found that while Davis received a 63 percent approval rating as governor, a clear majority of 62 percent disapproved of his efforts to solve the power crisis. The findings mirrored similar results from a Los Angeles Times poll published earlier this month.

Maviglio said the governor was continuing to hold talks over the weekend with state lawmakers and his staff. They are trying to design an auction at which the state would receive offers from power producers to buy electricity under long-term contracts.

Electricity can be bought much more cheaply through long-term deals. Many expect prices to fall significantly when the current chronic shortage starts to ease after the summer of 2002 as planned power plants come on line.

California's power problems are also rooted in the absence of any significant new plant construction during the last decade, partly due to uncertainly connected with the state's much criticized deregulation legislation.

Maviglio said Davis hoped to finalize the auction scheme by the middle of the week.

He noted that Davis has also talked of appointing a "power plant czar" to speed up the construction of new plants. Many of the state's plants are currently more than 30 years old and have been breaking down with alarming frequency.

ISO spokeswoman Stephanie McCorkle said by Monday around 9,000 megawatts or one-fifth of all available power would be off line, well below the recent peak of about 15,000 MW and also significantly below the 10,700 MW which was out of action on Friday.

One megawatt is enough to supply around 1,000 people. The ISO extended a so-called stage three emergency through midnight on Monday, its highest level of alert and one that is called when reserves drop to around 1.5 percent of demand, considered a critically low amount.

McCorkle noted that the ISO temporarily lifted its stage three alert on Saturday morning but was quickly forced to reinstate it.

"We had some rough moments yesterday morning," she said, noting that lifting of the stage three cut off the flow of electricity from some key suppliers in the Pacific Northwest.

"The Northwest doesn't have that many megawatts, so California does have to be on the brink of blackouts to get that power," she said.

Wholesale prices in California started to soar in late spring with supplies struggling to keep pace with surging demand linked to a buoyant economy and growing population.

-- Swissrose (cellier@azstarnet.com), January 21, 2001


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